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Interest rate gaps and monetary policy in the work of Henry Thornton: Beyond a retrospective Wicksellian reading

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  • Jean-Stephane Mesonnier

Abstract

This paper revisits the theory of interest rates propounded by Henry Thornton (1760 - 1815). Particular attention is paid to Thornton's examination of the inflationary effects of the gap between the Bank of England's discount rate and the current rate of profit. The paper shows that Thornton is also concerned, unlike Wicksell, about the consequences of a gap between the Bank of England's discount rate and the effective bank lending rate on the market for loanable funds, which results mainly from the usury laws. Thornton's analyses offer then a framework for regulating the value of money through adjustments to the bank rate.

Suggested Citation

  • Jean-Stephane Mesonnier, 2007. "Interest rate gaps and monetary policy in the work of Henry Thornton: Beyond a retrospective Wicksellian reading," The European Journal of the History of Economic Thought, Taylor & Francis Journals, vol. 14(4), pages 657-680.
    • Handle: RePEc:taf:eujhet:v:14:y:2007:i:4:p:657-680
    DOI: 10.1080/09672560701695505
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    Cited by:

    1. Ana Bela Nunes, 2009. "Tomás Cabreira: um economista político num país de finanças avariadas," Notas Económicas, Faculty of Economics, University of Coimbra, issue 29, pages 8-25, June.

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